Question

Total estimated direct labor hours for the company for the year are 102,500 hours. Kepple Manufacturing currently uses a traditional costing system. The company allocates overhead to its two products, Zips and Dees, using a predetermined manufacturing overhead rate based on direct labor hours. Here is data related to the company's two products: 2 (Click the icon to view the data.) The company is evaluating whether it should use an activity-based costing system in place of its traditional costing system. Additional information about production needed for the activity-based costing system follows: (Click the icon to view the additional information.) Information about the company's estimated manufacturing overhead for the year follows: E: (Click the icon to view the information about the company's estimated manufacturing overhead.) The amount of manufacturing overhead that would be allocated to one unit of Zips using the traditional costing system would be closest to (Round all answers to two decimal places.) A Data Table - X Data Table . X O A. $11.76 O B. $10.81 OC. $70.56 OD. $23.52 Direct materials per unit Direct labor per unit Direct labor hours per unit Annual production Zips $140.00 $45.00 3.0 28,000 Dees $80.00 $60.00 0.5 37,000 Direct labor hours Batches Engineering hours Zips 84,000 2,000 2,000 Dees 18,500 500 1,400 Total 102,500 2,500 3,400 Print Done - X A Data Table Activities Supervision and maintenance Batch costs Engineering changes Total estimated manufacturing overhead for the year Activity measures Direct labor hours Number of batches Number of engineering hours Estimated overhead cost $2,000,000 $216,500 $194.380 $2,410,880

Answer 1

Estimated Manufacturing Overhead for the Year Estimated Direct Labor Hours 2,410,880.00 102500 Overhead Rate Estimated Overhead Cost/Allocation Base = $23.52 $2,410,880/102500 Direct Labor Hours Per Unit of Zip = 3.0 Hrs Overhead Rate Per Unit of Zip = $23.52 x 3 Hrs = $70.56 So , Option C is Correct